With the UK retail vaping market worth almost £160m, c-store retailers can’t afford to ignore the growing potential of this lucrative category
Vaping is the future: that’s the message being received loud and clear from retailers, suppliers and statisticians alike. After all, according to Nielsen data (52 w/e 12 August 2017), the UK retail vaping market is currently worth almost £160m.
Stephane Berset, head of marketing at JTI, says that the rise in the number of adult vapers, now at almost two million (Nielsen Scan Track MAT July 2017 vs MAT July 2016) in the UK, represents a significant sales opportunity for retailers as the market continues to grow (KTNS Omnibus MAT Q2 2017).
“In the UK market, e-liquids are the future due to traditional tobacco getting more expensive and less appealing,” says Steve Moore, head of global sales at Ritchy EU & SMKD.
Alex Kapadia, a Bargain Booze franchisee who has two stores in Dunstable, Bedfordshire, has a designated vaping area on the shop floor of his stores. He points out that the margins provided by the products make it a winning category.
“E-cigs is a product that offers upwards of 40% margin on a repeat-buy product. With tobacco sales falling and smokers largely switching to e-cigs, it seems like an absolute no-brainer to devote space to this category.”
Nielsen data shows that value growth slowed in the first half of 2017, as a result of suppliers and retailers selling off non-compliant stock at a heavily-discounted rate, ahead of the 20 May deadline to ensure all products were EUTPD compliant. However, value sales have started to stabilise and volume sales are also showing growth.
David Wyatt, of Costcutter Service Station in Crawley Down, West Sussex, has tapped into this growing market in a big way by making his store a destination shop for vapers. He has an extensive range of about 50 different flavours of liquids, along with all the hardware and accessories. As well as having four units full of the liquids next to his counters, he also has a gondola-end display to allow shoppers to look at the devices and batteries up close.
“It’s like a mini vape shop within our shop. It’s seen as a good alternative to cigarettes and it offers good margins. We’re open 24/7 and we have a great range, so why wouldn’t people come here?,” he explains.
“Vaping is seen as being healthier than smoking traditional tobacco and there’s a massive price difference for the shopper. Also, as we get a new generation come into the market, I’m sure we’ll see lots more people trying out the products. I’ve already noticed that some people who aren’t smokers will enjoy trying an e-cig without tobacco in it as it’s just an interesting new thing, a bit like how people enjoy shisha.”
Julian Holliss, owner of a chain of forecourt and convenience stores across Devon, says the profit he makes from e-cigs overtook that of traditional cigarettes about a year ago, thanks to the high margin offered by vaping products.
“It’s a category that definitely deserves attention. With sales disappearing from traditional categories such as news and magazines, we need to look at this evolving category. We are seeing the trend continuing towards e-cigs so we want to capture as many people that might be thinking of converting from traditional tobacco as we can.”
Ollie Lodge, managing director at Rusdene Services, says this category is selling well in all six of his stores in Hampshire.
“Everyone’s got to stock these products. I’m surprised by some big companies who haven’t taken on the category to the extent that some independents have as it’s such an important opportunity.
“In all six stores we get a good old whack of e-cigarettes. I don’t think there’s any particular demographic of shopper who buys into this category, as more and more people are using these products in order to stop smoking traditional cigarettes. There’s been a huge uplift in the category.”
The refillable and capsule vape device market has grown 17.7% (Nielsen Scan Track Q2 2017 vs Q2 2016) in the past year. These are the fastest-growing devices in the traditional retail market, with 90% (KTNS Omnibus MAT Q2 2017) of UK vapers using refillable and capsule vape devices.
There has been a continued movement in the UK market towards open (tank) systems and e-liquid refills. In fact, Nielsen data shows that more than half of all vaping category sales are now through open-system products (54.5% in 12 weeks to 12 August 2017) up from 42.7% in the same period last year.
Jennifer Roberts, VP of customer marketing at Blu UK, says that the Blu PRO kit continues to be the top-selling open-system kit in the UK.
According to the latest insight, the three most popular vaping flavours are fruit (28%), followed by menthol (22.4%), and tobacco (21.7%) (Nielsen Scan Track Q2 2017 vs Q2 2016).
Julian stocks Vapouriz and Blu e-cig products. He says Vapouriz, thanks to its wide and quirky range, is popular with customers who want to experiment with different types of liquids and flavours.
David says if he were setting up an e-cigs category in his store right now he wouldn’t know where to start given all the high-quality brands and flavours available on the market. He says he’s very happy with his selection from Blu and Liberty Flights.
Alex sells about 200 different flavours of e-cig liquid in each of his stores, but he says the favourites are the simple flavours, such as tobacco, menthol, blueberry, apple and strawberry.
Ollie finds that this category benefits greatly from the odd multi-buy promotion. “We order through Vapouriz and they provide various different liquids with deals such as ‘three for £10’ and ‘three for £12’, which people seem to like.”
David agrees that deals such as ‘three for £10’ on e-liquids are important as this makes his offer competitive with the independent vape shops.
Catering to the traditional and promiscuous
For the more traditional e-cig user, 10 Motives has been a staple diet for adult e-cig users for nearly 10 years. The brand has built a loyal following since its inception, now selling upwards of 35 million cartomisers (refills) a year.
Nigel Hardy, general manager at 10 Motives, says: “There’s always a temptation to upgrade, refine and embellish, but sometimes what the consumer really wants is consistency, reliability and availability in a rapidly changing landscape.
“We’re proud to be able to say that 10 Motives is the number one UK brand, and to continue to build on that position we are constantly expanding our retail distribution network to ensure your shoppers are never far from their favourite brand.”
For shoppers looking for a ‘more playful’ vaping experience, Cirro is about to launch the Heritage range of e-liquids. Aimed at the vaper with a taste for the richness of tobacco, it covers the range of dark, golden, light and fruity flavours, evocative of a bygone era.
Hardy adds: “From its unregulated beginnings, which demonstrated huge consumer appeal and intrigue, it has migrated to a far more refined and regulated sector, meeting the needs of an increasingly aware and educated consumer. And throughout, 10 Motives and Cirro have been at the very forefront.
“Our aim is to maintain this position by meeting the needs of both the reformed adult smoker, along with the more experimental tastes of the promiscuous vaper. Under our Cirro brand, product development has been key, providing consumers and retailers with a pipeline of more flexible devices and a vast range of flavours. The variable power of the Cirro Evolve device has proved a big success with the more experienced vaper, primarily because of the bespoke Blends e-liquid range which accompanies it. Available in 50:50 propylene glycol and vegetable glycerin mix or 20:80, the Blends range gives the vaper much broader choice in achieving their perfect vape.”
Coming soon from Cirro will be the eStream sub-ohm device, which delivers more power to the vaper, a new taste sensation and a bigger vapour cloud.
Although stock must be compliant, there are very few restrictions on how the category is sold in store, meaning retailers can merchandise the category wherever they want and put up as much POS material as they like, although all content must comply with guidelines.
Recent research commissioned by Blu showed that one in eight people surveyed felt products weren’t visible enough. Blu has therefore developed a range of material to support retailers, from shelf-edge strips and selling units to in-store sampling stations.
Roberts adds: “Accessories are a great way to upsell and drive additional sales and margin, and save consumers from going online to buy.
“The key accessory to stock is the clearomiser. Consumers should change their clearomiser after every two bottles of e-liquid, or with every change of flavour or brand, to maximise their vaping experience, so ensure you ask every customer who buys an e-liquid bottle if they need a new clearomiser.”
Julian says he wants to do a better job of displaying his e-cigs, which he currently displays in a cabinet in front of the counter.
“I have seen some fantastic e-cig stations. There are some which are suspended from the ceiling, some which go behind the counter and others which go on the shop floor, and it’s the shop floor station I’m interested in.
“It’s important for the customers to be able to browse the category. When they are first converting from traditional cigarettes they will want to spend a while looking at the different strengths and flavours.”
Ollie is a great advocate of displaying e-cigs on the counter in order to garner the most interest in the category.
“We have them on the counters at all of the sites and this way the customers can have a good browse of the products, look at all of the different flavours and prices, and ask the staff any questions they have. I know some people choose to put them behind the counter, but it makes sense to me that with this sort of product, where the shopper wants to spend time looking at the different options available, to have them on the counter.”
Blu’s guide to stronger sales
You can still display, advertise and promote vaping products in store. Countertop units are a great way to drive visibility in store or, if space is limited, an impactful back wall display will do wonders to showcase your whole range
Make your store a destination outlet for vapers by being knowledgeable on the category and the different products available. Blu has created a range of education leaflets to help offer advice to retailers. Contact your Imperial Tobacco rep for further information
Stay stocked up
Make sure you’re always fully stocked with at least two or three of the top brands. If you don’t have a product in stock, customers may go elsewhere and not return. Stock at least one-open system branded range and one closed-system brand.
Stock a variety of flavours
Flavour is one of several significant product appeal factors that influences the willingness of smokers to try vaping products, so stock up on a range that offers a variety of flavours (Blu Commissioned Shopper Research June 2017). The Blu e-liquids range also includes 1.6%, 0.8% and 0.0% nicotine levels to meet a range of vapers’ needs
Don’t forget about clearomisers
Clearomisers are a great way to upsell and drive additional sales and margin. Consumers should change their clearomiser after every two bottles of e-liquid, or with every change of flavour or brand, to maximise their vaping experience.
Of course, staff do have to have the knowledge to answer any questions and Alex believes that training staff is essential to the sales of e-cigarettes.
He says that while many vapers now are au fait with how to use e-cigs, there are still a lot of people who don’t understand how to maintain their devices. He adds that Bargain Booze has set up an online training programme which franchisees can use.
Roberts points out the expertise is particularly important in the c-store industry as recent research from Blu has identified that for new vapers, the convenience channel is their first port of call.
“Our recent consumer research has shown that only a third of shoppers felt they were knowledgeable on the products. Being able to provide help and guidance to consumers will boost your sales and drive repeat purchasing,” he adds.
Julian says that knowledgeable staff can help to convert shoppers over to the higher-margin category.
“The more the staff know, the better,” he asserts. “This is especially the case when they are talking to a customer who is considering converting from traditional tobacco. They [staff] have to be able to talk to them about strengths and flavours and the different e-cigarette kits available, which can be quite confusing. There is a lot that goes into e-cigs, with the different accessories, clearomisers, batteries and ongoing maintenance.”
But swotting up on the subject is worth the effort. “I think it’s a no-brainer that the e-cigs category will continue to grow,” says David.
“As the choice of flavours widens and the products become more and more interesting to non-smokers as well as smokers, it’s going to continue to thrive.”
Ritchy EU aims to offer “the maximum vaping pleasure” with its range of Aramax devices and liquids.
Steve Moore, head of global sales at Ritchy EU & SMKD, explains: “The max flavour is due to our research and development departments that create only full-bodied flavours with no toxins. We are the only e-liquid company that have and use state-of-the art three axis mixing, which gives a perfect blend and means the flavour is the same in every batch produced.”
Tobacco flavours include classic, cigar, green, sahara, and USA, along with berry, peach, menthol, drink, apple, vanilla, strawberry, watermelon, cream dessert and coffee.
They are available in zero, 3, 6, 12 and 18 mg/ml strengths (rrp £2.99 per 10ml bottle).
The pen retails at £9.99 and the new power device has an rrp of £29.99.
Moore explains how the device is more “powerful”. “The size of the battery, which is 5000mah, is the most powerful device in convenience. The majority of pens are only 600mah and our Aramax pen is 950mah.
“We also provide a full year’s warranty which no other manufacturer does. We offer one year’s warranty from purchase.”